PRICING POLLUTION

PM’s carbon tax rebate plan

OTTAWA • The federal government will return 90 per cent of all the money it collects from a carbon price directly to Canadians, Prime Minister Justin Trudeau promised Tuesday.

Trudeau unveiled the details of the carbon tax rebates at a Toronto college, in an attempt to sell Canadians on the need to pay for pollution without breaking their pocketbooks.

“Starting next year, it will no longer be free to pollute anywhere in Canada,” Trudeau said. “Putting a price on pollution is the best way to tackle climate change, because it works.”

Trudeau said he believed Canadians would be on the side of pricing pollution to ensure emissions were cut and climate change was kept in check, noting they had seen the impacts from forest fires and floods to droughts and heat waves.

“Will we kick this can down the road yet again to be dealt with in another place or at another time or will we show some courage and do what needs to be done for this generation and the next?” he said.

Canadians in the four provinces with carbon pricing plans the federal government considers inadequate will receive preemptive rebates from Ottawa when they begin paying the federal carbon tax in April 2019.

The government estimates that average households in Ontario, Saskatchewan, Manitoba and New Brunswick will get back more than they pay through the federal carbon tax, in what Ottawa is calling a Climate Action Incentive.

For instance, in Ontario, the average household — calculated at 2.6 people in affected provinces — will pay $244 in 2019, but will get $300 back as part of their income tax returns in the spring of 2019, according to government estimates.

The federal price on fuel will come into effect in the four provinces in April 2019, the beginning of the next fiscal year. Beginning in July 2019, the system will also be applied in Yukon and Nunavut, which have opted for the federal tax in lieu of creating their own.

The federal government says 90 per cent of the revenue from the fuel charge will be returned directly to households through the annual rebate. The remaining 10 per cent will support small businesses, universities, hospitals, schools, municipalities, non-profits and Indigenous communities — organizations that won’t be able to pass 100 per cent of the cost on to consumers.

During a briefing in Ottawa on Tuesday morning, senior government officials said 70 per cent of households should make back more than they pay, with higher-income families less likely to break even. People in small communities and rural areas will also receive a 10-per-cent supplement. However, the federal government will need parliamentary approval to send out rebates before it’s actually begun collecting carbon tax revenue.

A separate carbon pricing system for heavy industrial emitters will come into effect in January 2019, but the government has yet to decide how those proceeds will be used, and says further details will be announced next year. That revenue will not be returned to households. Heavy emitters will have to report on their emissions from 2019 after the end of the calendar year, and will then have the option to purchase credits or carbon offsets, or to pay the federal carbon price. That means Ottawa will only see proceeds from heavy emitters in mid-2020, and cannot currently estimate how much revenue will be generated.

The government now estimates its carbon pricing plan will cut greenhouse gas emissions by 50 to 60 million tonnes in 2022, far less than an April 2018 estimate that found the plan would cut emissions by 80 to 90 million tonnes. Federal officials say the difference is largely because the Ontario government scrapped its cap-andtrade system after Premier Doug Ford was elected earlier this year.

The federal fuel charge will be levied at $20 per tonne of carbon emissions in 2019, rising by $10 per tonne each year until it reaches $50 per tonne in 2022. The government estimates the carbon tax will increase gasoline prices by 4.4 cents per litre in 2019, increasing to 11 cents per litre in 2022. Natural gas will increase by 3.9 cents per cubic metre in 2019, rising to 9.8 cents per cubic metre in 2022.